Case Number: ITA 172/DEL/2019
Appellant: Universal Buildrise LLP, New Delhi
Respondent: ITO, Ward-27(1), New Delhi
Assessment Year: 2012-13
Result: 2012-13
Case Filed On: 2019-01-10
Order Type: Final Tribunal Order
Date of Order: 2020-02-21
Pronounced On: 2020-02-21
Background and Decision: Universal Buildrise LLP appealed against the order of CIT(A)-9, New Delhi, which was related to the assessment year 2012-13. The appeal was based on several disallowances made by the AO, including a substantial business loss and managerial remuneration to the Director. The main contention was the disallowance of Rs. 36 lakhs paid as remuneration to Managing Director Shri Anshul Chawla, which the AO deemed not connected to any business activity due to minimal transactions reported by the LLP.
The ITAT, led by Vice President Ms. Sushma Chowla, ruled in favor of the appellant, stating that the remuneration paid was legitimate and tax on it was duly paid by the Director. The tribunal found no merit in the disallowance made by the AO and directed the remuneration to be allowed as a deductible expense. This decision underscored the tribunal’s role in rectifying misapplications of tax law and highlighted the need for assessing officers to adhere closely to legal standards when making assessments.
The tribunal’s decision has important implications for how managerial remuneration is treated in situations where business transactions are minimal but legally documented managerial duties are performed. This case sets a precedent for future cases involving similar disputes over the characterization of business expenses.
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